# LTO Properties Corp. v. Currey

> District Court, E.D. New York · August 12, 2024

URL: https://www.frixlaw.com/law-library/cases/10765557

## Case

- **Court:** District Court, E.D. New York
- **Decided:** August 12, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------------------------------- x
LTO PROPERTIES CORP., :
:
Plaintiff, :
: REPORT AND
-against- : RECOMMENDATION
:
KEN CURREY, AMERICAN EXPRESS : 23-cv-01795 (FB)(PK)
CENTURION BANK, and NEW YORK CITY :
ENVIRONMENTAL CONTROL BOARD, :
:
Defendants. :
-------------------------------------------------------------- x

Peggy Kuo, United States Magistrate Judge:
LTO Properties Corp. (“Plaintiff”) brings this foreclosure action pursuant to New York Real
Property Actions and Proceedings Law (“NYRPAPL”), Section 1301 et seq., against Ken Currey
(“Currey” or “Borrower”), American Express Centurion Bank, and City of New York Environmental
Control Board (“ECB”) (collectively, “Defendants”). Plaintiff seeks to foreclose its mortgage on real
property located at 666 Mother Gaston Boulevard, Brooklyn, New York 11212 (the “Property”). (See
Complaint (“Compl.”) ¶ 10, Dkt. 1.) Plaintiff has moved against all Defendants for a default judgment
of foreclosure and sale. (“Motion,” Dkt. 24.)
The Honorable Frederic Block referred the Motion to me for a report and recommendation.
For the reasons stated herein, I respectfully recommend that the Motion be granted.
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual Background
The following facts are taken from the Complaint, Plaintiff’s Memorandum of Law in Support
of the Motion (“Pl. Mem.,” Dkt. 24-2), the Declaration of Regularity by Alan H. Weinreb, Esq. in
Support of the Motion (“Weinreb Decl.,” Dkt. 24-1), the Declaration of John Ramer in Support of
the Motion (“Ramer Decl.,” Dkt. 24-6), and the Affirmation of John Ramer of Amounts Due to
Plaintiff (“Suppl. Ramer Decl.,” Dkt. 26-1). These facts are accepted as true for purposes of the
Motion. See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (in light of defendant’s default, a court
is required to accept all of plaintiff’s factual allegations as true and draw all reasonable inferences in
plaintiff’s favor).

1. Plaintiff
Plaintiff LTO Properties Corp. is a corporation organized under the laws of the Cayman

Islands with its principal place of business located in Miami, Florida. (Compl. ¶ 2.) Plaintiff is the
holder of a mortgage and note evidencing a loan agreement (the “Loan”) originally negotiated between
National City Bank as lender and Ken Currey and Joyce Currey1 as borrowers. (See Ex. B to Compl.
(“Mortgage”), Dkt. 1-1 at 3 (ECF pagination); Ex. C to Compl. (“Note”), Dkt. 1-1 at 13.) The Loan
was assigned to Plaintiff on October 23, 2020, before this foreclosure action was brought on March
8, 2023. (Weinraub Decl. ¶¶ 2–3; Ex. E to Compl., Dkt. 1-1 at 28.)
2. Defendants
Defendant Ken Currey is a resident and citizen of New York. (Compl. ¶ 3.) He is a borrower
of the Loan and mortgagor under the Mortgage.
Defendants American Express Centurion Bank and ECB are citizens of New York and are
allegedly necessary party defendants in this action because they are judgment creditors by virtue of
judgments docketed against Joyce Currey, a borrower of the Loan, that are allegedly subordinate to
the mortgage. (Id. ¶¶ 5–7; Ex. G to Compl.)

1 Joyce Currey was also originally named as a defendant in the Complaint. Ms. Currey unfortunately passed
away and was dismissed from the action on August 1, 2024. (See Dkts. 28 & 29.)
The Loan was made on May 10, 2007 to Ken Currey and Joyce Currey in the original principal
amount of $190,100.00 plus interest. The Mortgage and Note are secured by the Property, i.e., real
property located at 666 Mother Gaston Boulevard, Brooklyn, New York, 11212 in the County of
Kings and State of New York. On February 28, 2020, Ken Currey executed a Loan Modification
Agreement. (See Ex. D to Compl. (“Loan Modification Agreement” and, together with the Mortgage

and Note, the “Loan Documents”), Dkt. 1-1 at 22.) The Loan Modification Agreement reaffirmed
the validity of the Loan and modified the “Unpaid Principal Balance” due on the loan to $210,000.00.
(Id. ¶ 1.) The Loan Modification Agreement provided that annual interest of 7.00% would be charged
on the Unpaid Principal Balance. (Id. ¶ 2.)
Plaintiff alleges that Currey failed to comply with the terms of the Loan Documents by failing
to make payments that became due on August 1, 2022 and thereafter. (Compl. ¶ 16.) On October
21, 2022, Plaintiff sent Currey a Default Notice to cure, advising of him of the default, and warning
that if arrears were not cured, Plaintiff may declare the outstanding principal balance and interest due
under the Loan Documents immediately due and payable. (Id. ¶ 17; Ex. E to Compl., Dkt. 1-1 at 36.)
Plaintiff alleges that it also complied with the 90-day notice requirement under RPAPL Section 1304(1)
and the registration requirements under RPAPL Section 1306(1). (Id.) Currey failed to respond to
the Default Notice and remains in default. (Id. ¶ 20.)
The Loan Documents provide that if Borrower fails to comply with the payment obligations

under the Loan, Plaintiff has the right to foreclose its security interest in the property and recover
payment of any outstanding debt owed. (Mortgage ¶¶ 8–9; Note at 16; Loan Modification Agreement
¶¶ 5–7; 13–15.) Plaintiff alleges that the full amount due and owing as of June 14, 2024 is $223,749.95,
inclusive of costs and fees. (Suppl. Ramer Decl. ¶ 8.)
II. Procedural Background
Plaintiff brought this foreclosure action on March 8, 2023. (Dkt. 1.) Defendants were each
served with a summons. (Dkts. 10–13.) No Defendant appeared in the action. Plaintiff moved for
entry of default against Defendants (Dkt. 14), and on May 4, 2023, the Clerk of Court entered
certificates of default against all Defendants. (Dkt. 15.)
On August 4, 2023, Plaintiff filed a status report (Dkt. 23) stating that it had implemented a

forbearance agreement (Dkt. 29-1) until May 2024 and requesting a stay of the case pending the
forbearance term, which the Court granted. (Aug, 7, 2023 Order.) Plaintiff filed the Motion on
January 3, 2024. On June 3, 2024, Plaintiff filed a further status report, explaining that “Defendant
did not comply with the terms of the forbearance agreement” and, therefore, “there is no pending
forbearance agreement or associated stay.” (Dkt. 25.)
The Motion seeks entry of a judgment of foreclosure and sale based on the amount due to
Plaintiff on the Loan.
DISCUSSION
I. Default Judgment Standard
Rule 55 of the Federal Rules of Civil Procedure prescribes a two-step process for entry of a
default judgment. First, when a defendant “has failed to plead or otherwise defend,” the Clerk of
Court enters the defendant’s default. Fed. R. Civ. P. 55(a). The plaintiff may then move the court for
an entry of default judgment. Fed. R. Civ. P. 55(b)(2). “[J]ust because a party is in default, the plaintiff
is not entitled to a default judgment as a matter of right.” GuideOne Specialty Mut. Ins. Co. v. Rock Cmty.

Church, Inc., 696 F. Supp. 2d 203, 208 (E.D.N.Y. 2010). The plaintiff must demonstrate proper service
of the summons and complaint, Advanced Cap. Com. Group, Inc. v. Suarez, No. 09-CV-5558
(DRH)(GRB), 2013 WL 5329254, at *2 (E.D.N.Y. Sept. 20, 2013), and must establish compliance
with the procedural requirements of Local Civ. Rules 7.1 and 55.2.
The court must assure itself that it has subject matter jurisdiction and may also examine
whether it has personal jurisdiction over the defendant. City of New York v. Mickalis Pawn Shop, LLC,
645 F.3d 114, 125, 133 (2d Cir. 2011). The court must also determine whether the plaintiff’s
“allegations establish [the defendant’s] liability as a matter of law.” Finkel, 577 F.3d at 84. “[A] party’s
default is deemed to constitute a concession of all well pleaded allegations of liability.” Greyhound
Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). In considering a motion

for default judgment, a court accepts a plaintiff’s “factual allegations as true and draw[s] all reasonable
inferences in [the plaintiff’s] favor.” Finkel, 577 F.3d at 84. However, a default is “not considered an
admission of damages.” Greyhound, 973 F.2d at 158. “The plaintiff bears the burden of presenting
proof of damages, which may take the form of documentary evidence or detailed affidavits.” Joe Hand
Promotions, Inc. v. Benitez, No. 18-CV-06476 (ARR)(PK), 2020 WL 5519200, at *3 (E.D.N.Y. Aug. 27,
2020), R&R adopted, 2020 WL 5517240 (E.D.N.Y. Sept. 14, 2020).

1. Diversity Jurisdiction
The Court has diversity jurisdiction over Plaintiff’s claim pursuant to 28 U.S.C. § 1332. This
action is between citizens of different states and the amount in controversy, exclusive of interest and
costs, exceeds $75,000. Plaintiff is a citizen of the Cayman Islands and Florida, and Defendants are
citizens of New York. (Compl. ¶¶ 2–6.) Plaintiff seeks to recover $223,749.95 as of June 14, 2024.
(Supp. Ramer Decl. ¶ 8.)
2. Personal Jurisdiction

For this Court to exercise personal jurisdiction over a defendant, there must be jurisdiction
under New York law, service must have been procedurally proper, and the exercise of personal
jurisdiction must comport with constitutional due process. New York has general jurisdiction over
corporations formed under its laws and operating within the state. See Francis v. Ideal Masonry, Inc., No.
16-CV-2839 (NGG)(PK), 2018 WL 4292171, at *2 (E.D.N.Y. Aug. 3, 2018), R&R adopted, 2018 WL
4288625 (E.D.N.Y. Sept. 7, 2018).
The Court has general jurisdiction over American Express Centurion Bank because it is a New
York corporation “doing business” in New York and was properly served with the Summons and
Complaint. Id.; NYCPLR § 301.
The ECB is named as a defendant in this action. To the extent the ECB is a New York City

agency, it is not a suable entity. See N.Y.C. Charter § 396 (“All actions ... shall be brought in the name
of the city of New York and not in that of any agency, except where otherwise provided by law.”);
Windward Bora LLC v. Thomas, No. 20-CV-5320 (DG)(MMH), 2022 WL 14731628, at *4 (E.D.N.Y.
Sept. 30, 2022). Nevertheless, “when claims are brought against non-suable entities, the court may
construe them as brought against the City of New York.” Id. Thus, Plaintiff’s claims against the ECB
are construed as against the City of New York. The City of New York is subject to New York
jurisdiction, and the ECB was properly served with the Summons and Amended Complaint, so the
Court has personal jurisdiction over it.
This Court also has personal jurisdiction over Ken Currey because he is a resident of New
York and was properly served with the Summons and Complaint. NYCPLR § 301.

Plaintiff filed the following in support of the Motion: Notice of Motion (Dkt. 24); a
memorandum of law in support of the Motion (Dkt. 24-2); a copy of the certificates of default against

the Defaulting Defendants (Dkt. 24-5); a copy of the Complaint (Dkt. 24-5); a proposed default
judgment order (Dkt. 24-3). Plaintiff has also affirmed that Ken Currey is not an infant, in the military,
or an incompetent person. (Weinreb Decl. ¶ 10.) Thus, compliance with the Local Civil Rules is
satisfied.
Plaintiff, although not an original party to the Loan, has standing to bring this foreclosure
action. Under New York law, a plaintiff establishes its standing in a foreclosure action if it was either
the holder or assignee of the underlying note when the action was commenced. E. Sav. Bank, FSB v.
Thompson, 631 F.App’x 13, 15 (2d Cir. 2015) (quoting Wells Fargo Bank, N.A. v. Rooney, 19 N.Y.S.3d
543, 544 (2d Dep’t 2015)). National City Bank was the original lender to Ken Currey and Joyce Currey

as borrowers. (Mortgage; Note; Weinreb Decl. ¶ 2.) The Mortgage and Note were assigned to Plaintiff
on October 23, 2020 and recorded with the City Register of New York on February 26, 2024, prior
to commencement of the action on March 8, 2023. (Id. ¶ 3; Dkt. 26-2.) Accordingly, Plaintiff’s
standing is established.

Under New York law, Plaintiff is entitled to foreclosure if it alleges “the existence of an
obligation secured by a mortgage, and a default on that obligation.” OneWest Bank, N.A. v. Denham,
No. 14-CV-5529 (DRH)(AKT), 2015 WL 5562980, at *5 (E.D.N.Y. Aug. 31, 2015). If the elements
required for a foreclosure are established, the mortgagee has a “presumptive right to collect [unpaid
debts], which can only be overcome by an affirmative showing by the defendant.” Id.
Plaintiff alleges that Currey defaulted under the terms of the Loan Documents by failing to
make payments that became due on August 1, 2022 and thereafter. (Compl. ¶ 16.) The Loan
Documents provide that, if Borrower fails to timely make payments, Plaintiff has the right to institute
a proceeding for foreclosure and collect the debts owed to it by Borrower. (Mortgage ¶¶ 8–9; Note

at 16; Loan Modification Agreement ¶¶ 5–7; 13–15.) Because Currey defaulted, no affirmative
showing has been made to overcome Plaintiff’s presumptive right to collect its debts.
Furthermore, Plaintiff and Currey filed a signed stipulation (“Stipulation,” Dkt. 24-7), pursuant
to which Currey consents to the Court’s entry of a final judgment of foreclosure and sale, and Plaintiff
waived its right to recover any deficiency in the event the proceeds of the foreclosure sale are
insufficient to pay the amount adjudged due to Plaintiff (Id. ¶¶ 1–2.)
Accordingly, I find that liability against Currey is established and respectfully recommend that
a default judgment of foreclosure and sale be entered against him.
I also find that, although Plaintiff’s documentation shows that it is owed $223,749.95 on the
Loan—comprised of an unpaid principal balance of $210,000.00 and past due interest at an annual

rate of 7.00% from July 1, 2022 to June 14, 2024 of $28,793.05, minus a suspense balance in the
amount of $15,043.10 (Suppl. Ramer Decl. ¶¶ 5–8)—Plaintiff waived its right to seek a deficiency
judgment against Currey. Accordingly, I respectfully recommend that no deficiency judgment be
entered against Currey.
Plaintiff seeks appointment of a Referee, Susan Ellen Rizos, Esq., to direct the foreclosure and
sale of the Property. (Proposed Judgment at 2.) “Courts in this Circuit have permitted such
appointments where the plaintiff established a prima facie case by presenting a note, a mortgage, and
proof of default.” Com. Lender LLC v. 413 Greene Realty 2014 Corp., No. 22-CV-2910 (HG)(PK), 2023
WL 7000877, at *7 (E.D.N.Y. Sept. 7, 2023). Ms. Rizos has many decades of litigation experience
handling, among other things, foreclosure actions and real estate transactions, and has been appointed
in multiple similar foreclosure cases in this District. Id. (collecting cases).
Plaintiff also requests an award of sums expended in effectuating that sale and $750.00 in fees.

(Compl. at 7; Proposed Judgment at 2–3.) The terms of the Loan Documents entitle Plaintiff to these
fees. (Mortgage ¶ 10; Loan Modification Agreement ¶¶ 5–6.)
I respectfully recommend that Susan Ellen Rizos, Esq. be appointed Referee to effectuate the
judgment of foreclosure and sale of the Property, and Plaintiff be awarded the referee fee and sums
expended in the sale.
NYRPAPL § 1311 provides that the necessary parties to a mortgage foreclosure action include
“[e]very person having any lien or incumbrance upon the real property which is claimed to be subject
and subordinate to the lien of the plaintiff.” “This rule ‘derives from the underlying objective of
foreclosure actions—to extinguish the rights of redemption of all those who have a subordinate
interest in the property and to vest complete title in the purchaser at the judicial sale.’” Bank of Am.,

N.A. v. 3301 Atl., LLC, No. 10-CV-5204 (FB), 2012 WL 2529196, at *14 (E.D.N.Y. June 29, 2012)
(quoting NC Venture I, L.P. v. Complete Analysis, Inc., 803 N.Y.S.2d 95, 97–98 (2d Dep’t 2005)).
Courts regularly enter default judgments in foreclosure actions against defendants with
“nominal interests” in the relevant property, including parties holding subordinate liens or non-owner
tenants. E. Sav. Bank, FSB v. Robinson, No. 13-CV-7308(ADS)(SIL), 2016 WL 3365091, at *4
(E.D.N.Y. May 9, 2016) (collecting cases), R&R adopted sub nom. 2016 WL 3102021 (E.D.N.Y. June 2,
2016). When a default judgment is entered against such a defendant, the nominal interest in the
property is terminated. Windward Bora, 2022 WL 14731628, at *8.
In the Complaint, Plaintiff alleges that Defendants American Express Centurion Bank and
ECB hold subordinate liens in the Property by virtue of judgments docketed against either Borrower
or the Property. (Compl. ¶ 5–7.) Plaintiff alleges that these judgments are subordinate to Plaintiff’s
Mortgage, and that if these defendants “ha[ve] or claimed to have or may claim to have some interest
in or lien upon said mortgaged premises or some part thereof” then such “interest or lien, if any, has

accrued subsequent to, and is subject and subordinate to, the lien of said Mortgage.” (Compl. ¶ 7.)
Together with the Complaint, Plaintiff filed an exhibit listing the alleged judgments, which were
docketed against Joyce Currey. (See Ex. G to Compl., Dkt. 1-1 at 53.) Joyce Currey was a borrower
under the original Loan and was originally also named as a defendant in this action. Plaintiff
voluntarily dismissed Joyce Currey after learning she passed away. (Dkts. 28 & 29.) Because the
judgments held by Defendants American Express Centurion Bank and ECB were against Joyce Currey
and not Ken Currey, it is unclear whether Defendants American Express Centurion Bank and ECB
currently hold a lien on the Property, and it is therefore also unclear whether they are necessary party
defendants to this action. Nevertheless, Plaintiff’s pleadings are sufficient to establish any nominal
liability of these defendants. See Christiana Bank & Trust Co. v. Dalton, No. 06-CV-3206 (JS)(ETB),
2009 WL 4016507, at *5 (E.D.N.Y. Nov. 17, 2009) (granting default judgment against defendants

where complaint alleged that any judgments defendants “may have against [borrowers], if liens on the
mortgaged property, were subordinate to [plaintiff]’s lien”).
I find that because Defendants American Express Centurion Bank and ECB were properly
served with the Summons and Complaint, but failed to answer or otherwise respond, that Plaintiff’s
allegations with respect to these defendants are conceded. Therefore, I respectfully recommend that
a default judgment be entered against Defendants American Express Centurion Bank and ECB and
that their interests in the Property, if any, be terminated.
CONCLUSION
Based on the foregoing, I respectfully recommend that: (1) the Motion for judgment of
foreclosure and sale be granted; (2) the annexed Judgment of Foreclosure and Sale, which is
substantially similar to Plaintiff’s Proposed Judgment (Dkt. 24-3) (updated to reflect the information
in the Supplemental Ramer Declaration filed June 18, 2024 (Dkt. 26-1) and Stipulation dated May 15,
2023 (Dkt. 24-7)), be executed by the Court; and (3) the Property be foreclosed and sold with the

proceeds to be applied as set forth in the annexed Judgment of Foreclosure and Sale.
Plaintiff is respectfully requested to serve a copy of this Report and Recommendation on
Defendants forthwith and file proof of such mailing no later than August 19, 2024. Any written
objections to this Report and Recommendation must be filed within 14 days of service of this report.
See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). Failure to file objections within the specified time
waives the right to appeal any order or judgment entered based on this Report and Recommendation.
Caidor v. Onondaga Cnty., 517 F.3d 601, 604 (2d Cir. 2008).

Peggy Kuo

PEGGY KUO
United States Magistrate Judge

Dated: August 12, 2024
Brooklyn, New York

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10765557. Public record. Not legal advice.